Your Broker Requires an Initial Margin of $6,075 Per Futures

question 29

Multiple Choice

Your broker requires an initial margin of $6,075 per futures contract on wheat and a maintenance margin of $4,500 per contract.Wheat futures contracts are based on 5,000 bushels and quoted in cents per bushel.You sold one wheat futures contract yesterday at the closing settlement price quote of 786.Today,the settlement quote is 808.Will you receive a margin call and if so,for what amount? All margin calls restore the margin level to its initial level.

• A)no margin call
• B)call for $475
• C)call for $1,100
• D)call for $4,750
• E)call for $11,000

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Definitions:

Inflation

The progression speed of the general price index for goods and services, diminishing the effective value of money.

Cost-Push Inflation

Rising costs of doing business push up prices.

Open-Market Operations

Activities undertaken by central banks to buy or sell government securities in the open market to influence the money supply and interest rates.

Aggregate Demand

The all-embracing pursuit of goods and services in an economy, calculated at a fixed overall price level and within a chosen time frame.